Archive for category: Blog

By Clare Trapasso

Jul 6, 2023

As the mercury rises, will the housing market heat up—or continue to slump?

The story of the housing market over the past year or so has been how rising mortgage interest rates have decimated affordability, sidelining and pricing out would-be homebuyers. However, higher rates have led to an even larger problem: a worsening shortage of homes for sale.

Homeowners have been reluctant to trade up or down, or relocate and give up their record-low mortgage rates. That’s left buyers with very little to, well, buy.

“The housing market’s going nowhere fast,” says Mark Zandi, chief economist of Moody’s Analytics. “It should be a weak summer.”

“From a buyer’s perspective, it couldn’t be worse. Mortgage rates are high, home prices are high, there’s no inventory,” he says.

It’s not exactly smooth sailing for sellers either. While they’re still in the driver’s seat thanks to the worsening housing shortage, they’re unable to command the high prices of just a year ago. Buyers simply can’t afford to offer as much now that higher rates have resulted in substantially larger mortgage payments due each month.

In other words, buyers are struggling to afford purchasing a home, if they can even find one that meets their needs. Homeowners who would like to trade up or down or relocate are stuck. And sellers can no longer name their price. So the housing market has stalled.

“The summer is going to plod along” slowly and steadily, predicts national real estate appraiser Jonathan Miller. “It’s going to be more of a Goldilocks summer—not too strong and not too weak.”

Problem No. 1: There aren’t enough homes for sale

The biggest challenge confronting the summer housing market is there simply aren’t enough homes for sale.

The number of new listings is down 25.7% from June 2022 and down 28.8% from June 2019, according to Realtor.com® data. And while there are technically more homes for sale than there were a year ago, this is because some properties just aren’t selling.

These are the fixer-uppers, the oddly configured homes, the ones lacking curb appeal, the homes with unrealistically high price tags, the properties that aren’t ideally located. These homes were selling during the COVID-19 pandemic when folks were desperate. But now that housing costs so much, buyers are less willing to compromise on a home that may or may not have potential.

Anything appealing and move-in ready in a desirable area that’s priced to move is still selling very quickly.

“Homes are sitting for longer. We’re just not seeing as many homes cycle through the market this year,” says Realtor.com Chief Economist Danielle Hale. “As we move into late summer and early fall, we might see even fewer homes on the market.”

Many of the homes for sale are newly constructed. Existing-home owners have been loath to give up their low mortgage rates. So they’re staying put unless they have a compelling reason to move.

In April, roughly 29% of the homes for sale were new construction, according to Freddie Mac tabulations of Census Bureau and National Association of Realtors® data. That was the highest share of new construction since the data collection began in 1999.

“The challenge facing homebuyers this summer is more about limited choices than affordability,” says appraiser Miller. “The very limited supply of housing is the bigger roadblock.”

Not surprisingly, the lack of homes for sale has resulted in fewer home sales.

In a typical year, there would be about 5.5 million existing-home sales (which don’t include new construction). A really good year could be north of 6 million sales. But there are expected to be only about 4.2 million home sales this year, according to the Realtor.com midyear housing forecast.

“If we see more homes come up for sale, there are absolutely buyers who have been waiting on the sidelines,” says NAR’s Deputy Chief Economist Jessica Lautz.

 you a homeowner?

Problem No. 2: Mortgage rates remain high

Higher mortgage rates have been a primary culprit behind the slowdown in the housing market.

The U.S. Federal Reserve wasn’t a fan of the big run-up in home prices during the pandemic. It began raising its own interest rates in an effort to tame inflation and cool the housing market. Mortgage rates followed a similar upward trajectory, supersizing monthly payments.

The result: The typical mortgage payment was 91% larger* in June than it was in June 2019 and 9% more than in June 2022, according to a Realtor.com analysis.

Those higher mortgage rates have chilled the housing market. Scores of prospective homebuyers have been priced out, turning the American dream of homeownership into just that, nothing more than a dream for many would-be, first-time homebuyers. And rates are expected to remain high.

Economists anticipate mortgage rates will stay in the mid-to-high 6% range until the Fed cuts its rates. And unfortunately for buyers, Fed officials have said they expect another rate hike or two this year.

“It’s possible we could see mortgage rates tick back up a little bit. [But] I don’t think we’ll go back up above 7%,” says Hale.

“Unfortunately, interest rates have settled in at a much higher rate,” says Len Kiefer, deputy chief economist at Freddie Mac. “Absent some major shock, I wouldn’t expect rates to dip much lower.”

Problem No. 3: Prices are falling—but not enough to jump-start the market

This summer, home prices will likely continue to fall a little as buyers hit their financial limits.

In June, list prices fell nationally for the first time in years, dipping 0.9% from last June’s record high. That’s not enough to give most homebuyers any meaningful relief as mortgage rates remain high.

And those price declines aren’t universal. Prices fell in the most expensive parts of the country, generally in the West, and in the areas that boomed during the pandemic, such as the South. However, they’re still rising in the cheaper Midwestern and Northeastern markets.

“Real estate is very much more local now than it has been in years,” says Hale.

Exactly how much prices will go down depends on who is asked. Realtor.com expects prices will be 0.6% lower this year than last. Zandi of Moody’s Analytics expects home prices will continue to drop, falling 8% from their peaks last year. Meanwhile, economist Lisa Sturtevant believes prices will stabilize.

“In a lot of markets, we’re not to going to see prices run up,” says Sturtevant, chief economist of Bright MLS, the multiple listing service for the mid-Atlantic region.

The lack of homes for sale, though, is likely to keep the market competitive. Buyers who have their heart set on a property will likely have to compete for it. And they might have to offer more than the list price to win the bidding war.

Existing homes received about three offers each, with the “vast majority” going under contract in under a month, says NAR’s Lautz. (Existing homes do not include new construction.)

“I wouldn’t be surprised to see a modest amount of homebuying and selling continuing this summer,” says appraiser Miller. “The overarching theme of the summer is cautious optimism.”

* The calculation uses national median home list prices in June 2023, June 2022, and June 2019 and mortgage rates for 30-year fixed-rate loans for the third week in June of each of those years from Freddie Mac. It assumes buyers put down 20% and does not include property taxes, insurance costs, and homeowners association fees.Clare Trapasso is the executive news editor of Realtor.com where she writes and edits news and data stories. She previously wrote for a Financial Times publication, the New York Daily News, and the Associated Press. She also taught journalism courses at several New York City colleges.

A bathroom remodel is a great way to increase the value of your home and make it more enjoyable to live in. But with so many different styles to choose from, it can be hard to decide which one is right for you. Here are five popular bathroom styles to help you narrow down your options.

Traditional Style
The traditional style combines classic design elements with a touch of elegance. Features like pedestal sinks, clawfoot tubs and polished brass fixtures give your bathroom a timeless look. However, you can also incorporate modern conveniences like heated floors and rain showers to make it more functional. Bathroom remodeling doesn’t have to stick to one particular style, but can be helpful if the majority of fixtures are in sync with each other. 

Contemporary Style
Contemporary bathrooms are all about clean lines and minimalism. This style is perfect if you’re looking for a sleek, stylish space that is easy to maintain. Look for furniture and fixtures with simple geometric shapes and muted colors. You can also add a pop of color with a vibrant shower curtain or towels. 

Victorian Style 
The Victorian style is characterized by its ornate details and luxurious finishes. Cuff molding, intricate tile work, and heated towel racks are just some of the ways you can create a luxurious bathroom space. However, this style can be difficult to maintain, so make sure you’re prepared for the extra care required. 

Rustic Style 
If you’re looking for a cozy bathroom retreat, the rustic style is perfect for you. This style incorporates natural materials like stone and wood for an earthy feel. You can also add accents like Western-style rugs or antique light fixtures to complete the look. Just keep in mind that rustic bathrooms often require more upkeep than other styles due to their exposed materials. 

Nautical Style 
For a bathroom that evokes the feeling of being at the beach, go with a nautical theme. Blue and white stripes are a classic choice, but you can also experiment with other nautical-inspired patterns like anchor motifs or seashells. To complete the look, add Seaside-themed accessories like sea glass soap dispensers or starfish toilet paper holders. 

There are endless possibilities when it comes to styling your bathroom space. It all comes down to personal preference and what will work best in your home. Keep these five popular styles in mind as you start planning your bathroom remodel and you’re sure to find the perfect look for your home.

Lizzie Weakley is a freelance writer from Columbus, Ohio. In her free time, she enjoys the outdoors and walks in the park with her husky, Snowball. Looking to work with a brokerage in Michigan? Weakley recommends contacting The Stockton Team.

The roof is one of the most crucial parts of your home, and it’s important to keep it in good shape. Unfortunately, roofs can be susceptible to a variety of problems, which is why it’s important to know how to spot them. Here are four common roofing problems and how to spot them.

Shingle Damage
One of the most common roofing problems is damage to the shingles. This can be caused by a variety of things, including high winds, falling tree limbs, and hail. If you notice that some of your shingles are cracked, missing, or otherwise damaged, it’s important to have them replaced as soon as possible. Otherwise, you could end up with leaks or other more serious problems. Check out residential roofing replacement services in your area if you notice shingle damage. 

Leaks
Another common roofing problem is leaks. These can be caused by a variety of things, including damaged shingles, flashing that’s not installed correctly, or gutters that are clogged or leaking. If you notice any leaks in your roof, it’s important to have them repaired as soon as possible. Otherwise, you could end up with water damage or mold growth in your home.

Ice Dams
Another common problem in wintertime is ice dams. These occur when heat escapes from your home and melts the snow on your roof. The water then runs down to the edge of your roof and freezes again, creating a dam that prevents melting snow from running off your roof properly. Ice dams can cause serious damage to your roof if they’re not dealt with promptly, so it’s important to be on the lookout for them during the winter months.

Ventilation Problems
Proper ventilation is essential for keeping your roof in good condition. Without adequate ventilation, heat and moisture can build up under your roof and cause a variety of problems, including attic condensation, mold growth, and rotting wood. If you think you might have a ventilation problem, it’s important to have it checked out by a professional so that they can recommend a solution. 

Roofs are susceptible to a variety of problems, but fortunately, most of them can be spotted fairly easily if you know what to look for. If you notice any issues with your roof, don’t hesitate to contact a professional for help. The sooner you deal with the problem, the less damage it will likely cause.

Lizzie Weakley is a freelance writer from Columbus, Ohio. In her free time, she enjoys the outdoors and walks in the park with her husky, Snowball. Looking to work with a brokerage in Michigan? Weakley recommends contacting The Stockton Team.

As escalating mortgage rates and home prices shrink the pool of buyers, help your sellers understand why they’ll likely need to readjust their expectations.

June 21, 2022

by Melissa Dittmann Tracey

Key takeaways:

• Today’s sellers are seeing the market cool considerably from the homebuying frenzy just months ago and need greater education in order to price their home appropriately so it won’t linger.
• It’s still a seller’s market, but buyers are regaining negotiation leverage.
• Those who are relocating or need to sell quickly may not have time to test a high listing price.

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Home sellers had gotten used to setting sky-high asking prices, and voracious buyers were eagerly bidding them up even higher—until now. As the market shifts more in buyers’ favor, over 25% of homes on the market have experienced a price drop as of mid-June, according to data from Altos Research. In some areas of the country, price reductions are even more commonplace–most notably in Provo, Utah, where nearly half of homes on the market had a price reduction in May. Redfin data pinpoints other cities where 40% or more of listed homes are experiencing price drops:

• Tacoma, Wash.
• Denver
• Salt Lake City
• Sacramento, Calif.
• Boise, Idaho
• Ogden, Utah
• Portland, Ore.
• Indianapolis
• Philadelphia

Rumblings of a housing slowdown are growing as higher mortgage rates and double-digit annual home price gains deal a blow to buyers’ budgets. Housing analysts are warning home sellers that they may need to readjust their expectations, but many are still holding on to hope for a big resale profit, after seeing their neighbors generate a bidding war and sell in mere hours in a bidding war for well over the listing price just months ago. In the spring, nearly 6,000 homes sold for $100,000 or more above asking price, according to Redfin data.

“Sellers could do no wrong over the past two years and have become overconfident,” says James McGrath, a real estate broker and co-founder of New York–based real estate brokerage Yoreevo. “They could take the price their neighbor just got, bump it up 5% and still have a line out the door. But with the surge in mortgage rates, those days are over.” Some home sellers are now having to reduce their price 5% below nearby comps to sell quickly, McGrath adds.

Economists are quick to note that overall home prices are not likely to fall precipitously. In fact, the national median home price reached an all-time high of $447,000 in June, according to realtor.com®. An increase in listings for larger homes may be skewing that figure even higher, realtor.com® economists note. Housing inventory is slowly increasing, giving home buyers more selections in many markets and home sellers some extra competition. Meanwhile, buyers are showing greater concern about affordability.

Realigning Expectations

Even when the housing market begins to soften, sellers tend to hold on to the original price they had in mind, McGrath says. “Only after sitting on the market for a few months do they acknowledge their expectations may need to come down,” McGrath says. “Realistic sellers will get ahead of their neighbors with realistic prices to sell first.”

Real estate pros may need to have more upfront conversations with sellers about the list price so a later price reduction isn’t necessary. “Agents may have to do a better job in the current market of educating their sellers,” says Tansey Soderstrom, president of the Orlando Regional REALTOR® Association in Florida. “Homeowners can’t just sell for double what they paid for it anymore. Some sellers may have shown up late to that party.”

Still, some sellers may insist on a certain price against their agent’s advice, risking a feeling of shame if their home lingers on the market. “The pricing will greatly depend on how motivated the seller is,” Soderstrom says, adding that though the market has weakened, it’s still tilted toward sellers. “Some sellers may want to throw out a high price just to see if they can get it. But that strategy is likely different than a person who is relocating or someone who needs to sell quickly.”

Homeowners looking to sell fast need to carefully review competitive prices in the current market with their agent and be prepared when it may not exactly match up with their expectations.

Why Buyers Are Growing Wearier

Higher mortgage rates are shrinking the buyer pool, says Lawrence Yun, chief economist for the National Association of REALTORS®. The 30-year fixed-rate mortgage jumped from 2.93% one year ago to 5.78% as of the week ending June 16, according to Freddie Mac. On a $300,000 mortgage, the average monthly payment has increased from $1,265 last December to about $1,800 at today’s rate, Yun says.

Consumer confidence drives real estate activity, and with inflation at a 40-year high, stock market uncertainty and higher mortgage rates, more buyers are getting priced out, McGrath says. “Even if they can afford it, a buyer isn’t going to make one of the largest purchases of their life if they’re not confident and comfortable with their financial and employment situation,” he adds. As such, “smart sellers will reduce their pricing expectations and sell quickly.”

But home buyers haven’t abandoned the housing market. Demand is still strong and likely will remain so given improving inventory, which particularly will help first-time buyers, says Glenn Brunker, president of the mortgage servicer Ally Home. “Strong homebuyer demand will continue to support higher home price appreciation going forward, but likely at a much slower level,” Brunker says. “Certainly, we’re still in a seller’s market, but the buyer is starting to have more control and negotiating ability than they did six or 12 months ago. We’re seeing healthy examples of customers not buying as frantically, like ‘sight unseen’ offers or waiving their appraisal or home inspection. Those practices are beginning to stall, and it’s a return to a more normalized market with a more logical buying process.”

Melissa Dittmann Tracey

Contributing Editor

Melissa Dittmann Tracey is a contributing editor for REALTOR® Magazine. She can be reached at  mtracey@nar.realtor. Follow her on Instagram and Twitter: @housingmuse

Homeowners and REALTORS® alike want new roofs and kitchens. According to the 2019 Remodeling Impact Report, released by the National Association of REALTORS® (NAR), the two projects rank as the most popular home improvement projects among both demographics.

The report, which examines homeowners’ reasons for completing the projects ranked, also provides the costs and seller recovery values for many of the tasks.

Although NAR regularly releases similar reports, this is the first time since 2017 the organization has released this report, and there are some notable differences from what was included in that iteration two years ago.

“This year, we saw the estimated cost of closet renovations increase from 2017; however, we also saw an increase in the cost recovered from this project,” Brandi Snowden, director of Member and Consumer Survey Research at NAR, tells Housecall. “Because homeowners are staying longer in their homes, we see them investing more elaborately than in the past.”

Another effect of homeowners staying in their residences longer is they’re choosing to invest their money in projects that they’ll use on a daily basis, and that will improve the functionality and livability of their home.

Aside from kitchen renovations and upgrades and closet renovations, other interior projects hugely popular with both homeowners and REALTORS® this year are HVAC replacements, new wood flooring, bathroom renovations and adding new bathrooms.

As far as exterior projects, the REALTORS® surveyed in the report note that new roofing was most popular among homeowners, and, in their opinion, would add the most value to a home. Other exterior projects that ticked off both of these boxes were new vinyl windows, new vinyl siding, new garage doors and new fiber-cement siding.

Additionally, a Joy Score was calculated by NAR for each of the projects reported. This score is based on the happiness homeowners noted for each of the renovations. For exterior projects, new fiberglass and steel front doors scored the highest Joy Score each, at 9.7.

For interior projects, several renovations scored a perfect Joy Score of 10. They are: complete kitchen renovations, closet renovations, full interior and individual room paint, kitchen upgrades and basement conversions to a living room.

Here’s a graphic provided by the NAR that illustrates the top Joy Score projects as well as the top return-on-investment projects: